Correlation Between Ams AG and Medartis Holding

Can any of the company-specific risk be diversified away by investing in both Ams AG and Medartis Holding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ams AG and Medartis Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ams AG and Medartis Holding AG, you can compare the effects of market volatilities on Ams AG and Medartis Holding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ams AG with a short position of Medartis Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ams AG and Medartis Holding.

Diversification Opportunities for Ams AG and Medartis Holding

0.73

Correlation Coefficient

Ams AG  Medartis Holding

Poor diversification

The 3 months correlation between Ams and Medartis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ams AG and Medartis Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medartis Holding and Ams AG is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ams AG are associated (or correlated) with Medartis Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medartis Holding has no effect on the direction of Ams AG i.e., Ams AG and Medartis Holding go up and down completely randomly.

Pair Corralation between Ams AG and Medartis Holding

Assuming the 90 days trading horizon Ams AG is expected to generate 2.03 times more return on investment than Medartis Holding. However, Ams AG is 2.03 times more volatile than Medartis Holding AG. It trades about 0.13 of its potential returns per unit of risk. Medartis Holding AG is currently generating about 0.25 per unit of risk. If you would invest  594.00  in Ams AG on December 28, 2024 and sell it today you would earn a total of  205.00  from holding Ams AG or generate 34.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ams AG  vs.  Medartis Holding AG

Ams AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ams AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ams AG showed solid returns over the last few months and may actually be approaching a breakup point.

Medartis Holding

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medartis Holding AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Medartis Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ams AG and Medartis Holding

The main advantage of trading using opposite Ams AG and Medartis Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ams AG position performs unexpectedly, Medartis Holding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Medartis Holding will offset losses from the drop in Medartis Holding's long position.

The idea behind Ams AG and Medartis Holding AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.